money as medium of exchange vs store of value
I've been thinking about the use/purpose of money, and it seems that many agree that it is both a medium of exchange and a store of value. Our modern economies seem to rely on the free flow of money for smooth and proper functioning, which fulfills the 'medium of exchange' part. However, the store of value part presents a problem if a significant portion of money isn't circulated through the system (i.e. hoarding). I do find myself agreeing with many parts of Austrian economics that argue against fractional-reserve banking and the leveraging of money, and also their contention that such and other monetary policies lead to boom/bust cycles. The challenge I see is in having too much money saved in full-reserve demand deposits. Even if this were "properly" implemented, which would necessitate safekeeping fees instead of our current "free" "demand deposits", a hoarding problem would exist if too high a fraction of the money supply is kept from circulation in this way. This is why I am starting to think that maybe the 'medium of exchange' function of money is paramount, and the 'store of value' function secondary in importance. Sure perhaps it is necessary to have it as a short-term store of value for convenience sake, but for long-term it would seem to be potentially extremely counterproductive.
I understand that in our current system, the deposit base of people like you and me (in our "demand deposits"...I use quotation marks because although the balances are available on demand, and even "insured" by the FDIC, the money deposited is actually not stored away but lent out), and the subsequent leveraging up of the money supply through fractional-reserve lending, provides a crucial liquidity for our economies. I wonder what would happen if full-reserve banking were indeed implemented. Demand deposits would become virtual safes, with any money inside not participating in the facilitation of economic exchange. The only way lending/banking could occur is with time deposits and direct investment by cash holders. I think everyone agrees that lending/banking is very important for economic development. The question is how to keep a well-functioning banking system and allow for a healthy amount of lending even with full-reserve "safe deposit box" accounts.
It further makes sense that perhaps one of the main problems is the centralization of banking and legal tender laws. Maybe with both of those done away with, and having truly free-market money (e.g. the gift cards issued by many ostensibly reputable vendors, although that example is flawed b/c the gift cards themselves are "indexed" to the $ or FRN) is the way to go, because if central planning doesn't work when it comes to guiding economies, why should it be given a special exemption when it comes to money/banking? Perhaps a better example than the one I put there with the gift cards is having minutes of call-time on a communications network as a form of currency (I got that from BattleTech for any of you who know what that is). And certainly you can have a private bank issue its own currency, backed by its own assets. In any case let the free market decide what will work best.
Thanks for reading, and I apologize in advance if I betray gross ignorance with anything up there, as I certainly am no expert. I would love to know your thoughts on the comparative values of the 'medium of exchange' and 'store of value' functions of money, or anything else relevant to money/banking. And if you think I'm a free-marketeer nutjob that's okay too. :)